Early smart clothing firm OMSignal is out of business
Aug 20, 2020
After declaring bankruptcy at the beginning of 2019, the Canadian company sold some of its patents to Honeywell. Share
OMSignal, a Canadian digital health startup that helped to pioneer the smart clothing space, is out of business as of February 2019, MobiHealthNews has learned. The company declared bankruptcy and sold some of its patents to Honeywell Safety Products. According to a notice published by PricewaterhouseCoopers in Quebec , where the company was located, OMSignal filed for bankruptcy in January 2019 with just under $1.7 million in liabilities and only about $1 million in assets. The filing lists OMSignal investors Investment Quebec, Real Ventures and Relay Ventures among the company's creditors, along with Chinese wearables-giant Huami, which was owed nearly $700,000. A report in the Montreal Journal says that Huami supplied components for OMSignal's wearable garments. OMSignal raised $24 million in equity over the course of its existence, plus some additional debt. In order to pay back creditors, the company sold some of its intellectual property to Honeywell, which has taken over at least three OMSignal patents . While some OMSignal team members said in their LinkedIn bios that Honeywell acquired OMSignal, Honeywell confirmed to MobiHealthNews that it only acquired the patents. Honeywell and Investment Quebec declined to comment further for this story. OMSignal’s leadership team and its other investors could not be reached for comment after multiple attempts. A pioneer of smart clothing
Founded in 2011 by Stéphane Marcaeu and Frédéric Chanay, OMSignal was one of the first companies to try to extend the success of health-tracking wearables into the area of smart clothing . Its first product, announced in 2013, was an undershirt with sensors woven into the fabric that could measure ECG, activity, breathing patterns and "emotive" states on a continuous basis and present that data to the wearer via an app on their mobile device. The company’s big break came in 2014, when it inked a deal with Ralph Lauren to integrate its sensors into Ralph Lauren polo shirts, which debuted on ball boys at the U.S. Open and hit stores the following year. The company parlayed that publicity into a $10 million funding raise and another product, a smart sports bra called OMbra . It also launched an app called OMrun that could be used with its products. What went wrong? OMSignal was involved in at least two patent disputes – one in 2015, when Georgia-based Sarvint Technologies sued it and several of its other competitors, and one in 2014, when Carré Technologies (Hexoskin), another Montreal company, sued over a patent . Both suits against OMSignal were ultimately dismissed, but the legal fees could still have been a contributing factor in its financial woes. Another possibility is this is a case of a company moving too fast in a digital health subsector the world simply wasn’t ready for. While it always appeared to be a next logical step for the wearables space, smart clothing never really took off as a consumer product, perhaps owing to the cost of the garments or the care they required. Smart clothing faces additional hurdles to other wearables. "We don’t think [smart clothes] make sense, because we all wear different clothing," Spire Health CEO Jonathan Palley told MobiHealthNews in 2017 . "There’s a good chance you and I have the same phone — we almost certainly don’t have the same wardrobe,”
A number of smart clothing companies are still in operation, but recent entrants like Chronolife and Nanowear , seem to be focusing on medical use cases and FDA clearance, something OMSignal intentionally eschewed, at least early on. What’s next? Despite bullish predictions from research firms, investors have not paid much attention to the smart clothing space for the last few years. Part of this may be due to changes in how value is perceived in the wearables space. "We can take a lesson from Fitbit: the money is in the data, not the device and that's the valuation it was based upon," said John Nosta, a futurist who closely follows the digital health space. "Further, the passive acquisition from non-personal sensors will make cloth-based devices less attractive and relevant. "
That said, the space is far from dead. For instance, Sensoria currently offers both a smart bra and a smart undershirt – the same two products OMSignal had – in addition to its flagship smart socks. Hexoskin also offers men’s and women’s undershirts with health sensors. It’s not clear what, if anything, Honeywell plans to do with OMSignal’s IP, but given that it’s the Safety Products division that made the acquisition, it could be looking at industrial applications. As for OMSignal's founders, both have moved on: Marceau left Honeywell in 2016 and currently leads Fintech company Thinking Capital, while Chanay cofounded a data science company called Notik in January of this year. Tags: